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How Does Yum! Brands Compare to Its Peers?

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Yum! Brands and its peers

An analysis of Yum! Brands’s income statement for 3Q15 is as follows:

  • The gross profit margins of Yum! Brands (YUM), McDonald’s Corporation (MCD), Jack in the Box (JACK), Domino’s Pizza (DPZ), and Dunkin’ Brands Group (DNKN) are 29.1%, 38.3%, 44.9%, 31.3%, and 82.7%, respectively.
  • The EPS (earnings per share) of Yum!, McDonald’s, Jack in the Box, Domino’s Pizza, and Dunkin’ Brands are $0.95, $1.26, $0.75, $0.81, and $0.44, respectively.

An analysis of Yum!’s balance sheet for 3Q15 is as follows:

  • The current ratios of Yum!, McDonald’s, Jack in the Box, Domino’s Pizza, and Dunkin’ Brands are 0.72, 2.2, 0.80, 1.5, and 1.8, respectively.

An analysis of Yum!’s valuation is as follows:

  • The PE (price-to-earnings) ratios of Yum!, McDonald’s, Jack in the Box, Domino’s Pizza, and Dunkin’ Brands are 40.9x, 23.6x, 28x, 34.6x, and 24.7x, respectively.
  • The PS (price-to-sales) ratios of Yum!, McDonald’s, Jack in the Box, Domino’s Pizza, and Dunkin’ Brands are 2.8x, 3.7x, 1.8x, 2.8x, and 5.1x, respectively.

According to the above findings, competitors have outperformed Yum! Brands based on gross profit margin, current ratio, and PS. However, Yum! is far ahead of its competitors based on EPS and PE.

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ETFs that invest in Yum! Brands

The PowerShares DWA Momentum ETF (PDP) invests 1.5% of its holdings in Yum! Brands. The ETF tracks an index of 100 US-listed large and midcap companies selected and weighted by relative stock performance.

The Consumer Discretionary Select Sector SPDR ETF (XLY) invests 1.5% of its holdings in Yum! Brands. The ETF tracks a market-cap–weighted index of consumer discretionary stocks drawn from the S&P 500.

The PowerShares Russell Top 200 Pure Growth ETF (PXLG) invests 1.5% of its holdings in Yum! Brands. The ETF tracks an index of US large-cap growth stocks, selected and weighted by price-to-book ratio, forecast growth, and historical sales growth.

Yum! Brands and its ETFs compared

An analysis of Yum! Brands’s price movement is as follows:

  • The year-to-date price movements of Yum!, PDP, XLY, and PXLG are 16.3%, -0.25%, 7.8%, and 1.7%, respectively.

An analysis of Yum!’s valuation is as follows:

  • The PE (price-to-earnings) ratios of Yum!, PDP, XLY, and PXLG are 40.9x, 22.7x, 18.6x, and 26.4x, respectively.

Thus, based on price movement and PE, Yum! Brands has outperformed the ETFs that invest in it.

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